Last week, the iBoxx China USD Bond Investment Grade Index fell by 0.22, while the High Yield Index rose by 0.28. The yield-to-maturity for investment-grade bonds increased by 0.03%, whereas high-yield bond yields decreased by 0.71%.
Domestic macroeconomic data indicated a general improvement in China's economic climate. According to the National Bureau of Statistics, the Manufacturing PMI, Non-Manufacturing Business Activity Index, and Composite PMI Output Index for December stood at 50.1%, 50.2%, and 50.7%, respectively, rising by 0.9, 0.7, and 1.0 percentage points from the previous month, with all three indices entering expansionary territory.
Li Bin, Deputy Director and Spokesperson of the State Administration of Foreign Exchange, addressed questions regarding China's external debt data as of the end of September 2025. In the third quarter of 2025, China's external debt situation remained generally stable. Firstly, the scale of external debt saw a steady decline. By the end of September 2025, China's total external debt balance (including local and foreign currency) was $2.3684 trillion, a decrease of 2.8% from the end of June 2025. Secondly, the structure of external debt remained fundamentally stable. In terms of currency composition, local currency debt accounted for 51.9%, down 0.2 percentage points from the end of June 2025; in terms of maturity structure, medium- and long-term external debt accounted for 42.5%, up 0.1 percentage points from the end of June 2025. Overall, China's external debt scale declined steadily, its currency structure remained largely stable, and its maturity structure saw some optimization.
The "Several Provisions of Shanghai Pudong New Area on the Development of Free Trade Offshore Bond Business" were passed at the 26th Session of the 16th Standing Committee of the Shanghai Municipal People's Congress on December 30, 2025, and will take effect on March 1, 2026.
In the offshore bond market, primary market issuance volume declined last week. In the secondary market, the China USD investment-grade bond index edged down slightly, while high-yield bond indices generally saw modest gains. The investment-grade market as a whole performed relatively steadily.
Regarding corporate bonds, events in Venezuela caused global market turbulence and slight fluctuations in international oil prices, which subsequently stabilized. Goldman Sachs stated that the event's short-term impact on oil prices is expected to be limited, but long-term production might increase. China USD bonds related to oil and petrochemicals experienced slight declines last week. Urban investment bonds (LGFVs) showed relative stability, with the China USD LGFV bond index continuing its upward trend.
In the high-yield market, the China USD real estate bond index posted a slight increase. Vanke's dollar bonds continued to trade with low volatility; bonds from China Jinmao, Dalian Wanda, and Longfor Group also experienced minor fluctuations.
In terms of company announcements and news, the effective date for Country Garden's (02007.HK) restructuring was confirmed on December 30. Ronshine China Holdings (01996.HK) further extended the deadline for fees related to the Early Restructuring Support Agreement and the Basic Restructuring Support Agreement. KWG Group Holdings (01813.HK) has appointed advisors to discuss solutions for its offshore debt. Hilong Holding (01623.HK) saw its winding-up petition hearing adjourned to March 2, 2026. Fantasia Holdings (01777.HK) entered into a restructuring agreement with Splendid Fortune to sell 409 million shares of Color Life for $4.5284 million.
Overseas macroeconomic data revealed divisions within the Federal Reserve. The meeting minutes showed that three officials dissented at the December meeting, the highest number since 2019. Two argued for keeping rates unchanged, while another favored a larger rate cut. The discussion did not end there. The minutes indicated that even among officials supporting a cut, a "few" were very close to favoring no change, reflecting significant internal divergence within the committee regarding the economic outlook and policy path. As of the time of writing, the US 2-year Treasury yield was 3.47%, and the US 10-year Treasury yield was 4.19%.
In primary market issuance last week, two companies issued new offshore bonds, both being offshore RMB bonds issued by LGFVs. Chongqing Puling Development issued RMB 220 million bonds with a coupon rate of 3.5%, backed by a Standby Letter of Credit from Chongqing Three Gorges Bank, marking the company's first offshore bond issuance in two and a half years. Zibo Zhangdian State-owned Capital Operation directly issued RMB 48 million bonds with a coupon rate of 6.9%.
The offshore debt restructurings for Country Garden and CIFI Holdings Group have been implemented, with both property developers issuing several new US dollar bonds. Specifically, Country Garden issued 6 US dollar bonds with a combined size exceeding $12.9 billion. This restructuring plan involves approximately $17.7 billion in offshore debt. Following the restructuring's effectiveness, Country Garden's offshore debt burden will decrease significantly, and the gradual conversion of mandatory convertible bonds is expected to substantially ease liquidity pressure. CIFI Holdings Group issued 4 US dollar bonds totaling approximately $5.7 billion. This offshore debt restructuring involves a total principal and interest of about $8.1 billion. The company has canceled the existing debts and related obligations and issued a series of scheme consideration interests to scheme creditors. The newly issued consideration includes interests in new notes, new loans, mandatory convertible bonds, and cash consideration.
Last week, ratings for one company were changed. Moody's downgraded Vanke Enterprise Co., Ltd.'s Corporate Family Rating to "Ca" with a "Negative" outlook. Vanke's liquidity has come under significant pressure, evidenced by its failure to repay a RMB 2 billion principal and related interest on an onshore bond within the original 5-business-day grace period. Although most bondholders agreed to extend the grace period to 30 trading days, this overdue event indicates the company's limited financial flexibility in meeting short-term debt obligations, potentially weakening recovery prospects for creditors. Over the next 6-12 months, Vanke still faces substantial debt repayment pressure, including approximately RMB 18 billion in onshore bonds maturing or becoming putable by the end of 2026.
Regarding bond tender offers, PCCW subsidiary CAS No.1 announced a cash tender offer for CASHLD 4 PERP, with a purchase price of $1,000 per $1,000 principal amount of bonds, set to expire on January 12.
There were no new defaults.
In the secondary market, actively traded bonds last week included: Convertible bonds - NIO 4.625 10/15/30 and NIO 3.875 10/15/29 ($6 million and $3 million); Alibaba BABA 0.5 06/01/31 and BABA 0 09/15/32 ($2.823 million and $2.7 million); Li Auto LI 0.25 05/01/28 ($2 million). Financial sector - AIA 5.4 09/30/54 and AIA 4.95 03/30/35 ($2.18 million and $1 million); CCB Financial Leasing Corp. CCBFIN Float 09/17/28 ($1.262 million); Prudential plc PRUFIN 2.95 11/03/33 ($1 million). Industrial sector - Lenovo Group LENOVO 3.421 11/02/30 ($6 million); MTR Corporation MTRC 5.25 04/01/55 ($5.6 million); Wynn Macau WYNMAC 6.75 02/15/34 ($5.54 million); Melco Resorts & Finance MPEL 5.375 12/04/29 ($5.1 million). Property sector - Future Land FTLNHD 4.5 05/02/26 ($12.4 million); Logan Group LOGPH 5.25 10/19/25 ($3 million); Shimao Group SHIMAO 2 07/21/32 ($3 million).
Lists of the top 10 performers in valuation changes for various bond categories (LGFV USD bonds, Property USD bonds, Financial USD bonds, Industrial USD bonds) were provided.
Company news: Country Garden (02007.HK) announced that the effective date of its restructuring was confirmed on December 30, 2025. The proposed restructuring broadly involves the cancellation of existing debts and the release of all existing obligors in exchange for the issuance of scheme consideration interests to scheme creditors on the effective date pursuant to the scheme. On the effective date, the company distributed the following cash payments and instruments as part of the scheme consideration, which are being allocated to relevant scheme creditors according to the scheme's terms.
Country Garden Real Estate Group issued an announcement regarding the completion of the redemption for "22 Country Garden MTN002". The issuer raised funds for redemption by activating the counter-guarantee mortgage assets for the bond and completed the principal and interest payment on December 26, 2025.
Ronshine China Holdings (01996.HK) announced that it has received responses from certain existing debt holders indicating they need more time to complete internal procedures for joining the Restructuring Support Agreement. Given this, the company announced a further extension of the fee deadlines for the Early Restructuring Support Agreement and the Basic Restructuring Support Agreement.
KWG Group Holdings (01813.HK) announced that it has appointed advisors, who have already engaged with the company and its offshore creditors to discuss all feasible solutions for a comprehensive resolution of its offshore debt. The company will make further announcements to update security holders and other investors in due course.
Likai Group (01622.HK) announced it is still advancing its overall debt restructuring plan and has successfully extended RMB 2.7 billion in onshore debt.
Fantasia Holdings (01777.HK) announced it entered into a restructuring agreement with Splendid Fortune to sell 409 million shares of Color Life for $4.5284 million. Upon completion, Color Life will cease to be a subsidiary of the company. Fantasia Group (China) announced the results of the first bondholders' meetings in 2025 for bonds "20 Fantasia 02", "20 Fantasia 01", "19 Fantasia 02", "19 Fantasia", and "H18 Fantasia". The meetings reviewed and passed proposals to adjust the principal and interest repayment arrangements for these bonds.
According to The Paper, the draft substantive consolidation and reorganization plan for Suning Appliance Group and 37 other companies was approved after three extensions.
Hilong Holding (01623.HK) announced regarding the winding-up petition filed against the company by the petitioner. On December 30, 2025, upon the joint application for an adjournment by the petitioner, the company, and the opposing creditor, the High Court vacated the petition hearing originally scheduled for January 5, 2026, and adjourned the hearing to March 2, 2026.
China Jinmao (00817.HK) announced a proposed securities redemption. The issuer will fully redeem the CHJMAO 6 PERP on February 8, 2026. As of the announcement date, the outstanding principal amount of the securities is $500,000,000. After the redemption is completed on the first reset date, there will be no issued but outstanding securities.
Yuexiu Property (00123.HK) announced that on December 31, 2025, Grandview Limited (Grandview), as borrower, entered into a facility agreement with a bank, as lender. Under the agreement, the lender will provide a HK$500 million revolving credit facility, subject to the terms and conditions of the facility agreement, with a term of 364 days from the date of the agreement. Grandview is a wholly-owned subsidiary of the company, and its obligations under the facility agreement are guaranteed by the company.
According to media reports, information disclosed by the Hong Kong Special Administrative Region High Court showed that the Hong Kong SAR Court of Appeal dismissed former Evergrande Group President Xia Haijun's application for leave to appeal against a worldwide Mareva Injunction. The court upheld the injunction restricting him from transferring HK$60 billion in assets and disposing of proceeds from a property at The Pavilia Hill in Hong Kong, and prohibited a re-hearing via "oral hearing".
Macau-based casino operator SJM Holdings (00880.HK) announced plans for a cash tender offer for $500 million of its 5% senior notes due 2026, alongside the simultaneous advancement of a new notes issuance.
PCCW subsidiary CAS No.1 plans to launch a cash tender offer for CASHLD 4 PERP. Concurrently, the issuer intends to issue PNC5.25 perpetual subordinated guaranteed securities and will hold an investor conference call today.
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